The Reserve Bank of India (RBI) recently moved over 100 tonnes of gold from the UK to add to its domestic reserves.
A Business Today report indicates that additional gold may be brought back annually, marking the first increase in domestic gold reserves since 1991.
RBI’s gold deposit status
The majority of the RBI’s gold is stored securely with the Bank of England and the Bank of International Settlements, while around one-third is kept within the country.
This action will also assist the RBI in saving storage expenses paid to the Bank of England.
Gold reserves increased by about 28 tonnes in a year
As per the RBI’s yearly data, the Central Bank’s gold holdings in its foreign exchange reserves stood at 822.10 tonnes as of March 31, 2024,
compared to 794.63 tonnes during the previous year’s same period.
In 1991, Chandrashekhar government mortgaged gold
In 1991, during the Chandrashekhar government’s tenure, gold was pledged to address the balance of payment crisis.
From July 4 to 18 of that year, the RBI pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to raise $400 million.
Purchase of 200 tonnes of gold in 2009
The Reserve Bank of India purchased 200 tonnes of gold from the International Monetary Fund (IMF) around 15 years ago.
During the UPA government’s tenure in 2009, led by Prime Minister Manmohan Singh
India acquired another 200 tonnes of gold valued at $6.7 billion to broaden its asset portfolio.
In recent years, the Reserve Bank has consistently increased its gold reserves through additional purchases.
When did the exercise of depositing gold start on a regular basis
The central bank holds gold in reserves mainly to diversify its foreign currency assets, safeguarding against inflation and foreign exchange risks.
Since December 2017, the RBI has been consistently acquiring gold from the market.
Gold reserves increased by about 1% in a year
The proportion of gold in the nation’s overall foreign exchange reserves rose from 7.75% in December 2023 to approximately 8.7% by April 2024.
Gold within the country is stored in vaults located at the RBI building on Mint Road in Mumbai and also in Nagpur.
Based on a World Gold Council report, this amounts to approximately 17% of the total gold withdrawn from global central banks.
These reserves were expected to surpass 36,699 metric tons (MT) by the end of 2023.
The majority of this gold was acquired in the last 14 years, beginning in 2010 when India became a net buyer of gold.
